Social security integration (Permitted disparity)

 
Definition

Method of computing and allocating nonelective contributions under an employer sponsored plan, where the allocation method results in participants with compensation above the integration level receiving a higher percentage of contribution .

When computing social security integration, the taxable wage base is used to determine the allocation of contributions.

Referring Cite

  • IRC § 401(l)
  • Treas Reg § 1.401(l)-1 Permitted disparity in employer-provided contributions or benefits.
  • Treas Reg § 1.401(l)-2 Permitted disparity for defined contribution plans.
  • Treas Reg § 1.401(l)-3 Permitted disparity for defined benefit plans.
  • Treas Reg § 1.401(l)-5 Overall permitted disparity limits
  • Notice 89-70

 

Additional Helpful Information

  • Permitted disparity cannot be used for SIMPLE IRAs